Having grown up in Dearborn, Michigan, the home of Ford Motor Company and with many family and friends working in the automobile business it is always great to read stories like the one below. Scores of people from around the country do not understand what the automobile business means to this region.
When the Federal government supplied loans to General Motors and Chrysler there was a lot of resistance around the country but letting these company’s fail would have been worse for the economy. I recently worked with a client as their part time CFO that successfully went through the Chapter 11 bankruptcy process. My client could have just filed Chapter 7 dissolution and walked away from everything but decided to fight to keep the business going. It was a long and expensive process and some creditors took a little hit on their receivables or loan amounts but in the end 80 employees still had a good job.
NEW YORK (CNNMoney) — Ford Motor combined strong sales and improved pricing to roar past earnings forecasts and post its best first-quarter profit since 1998.
Ford earned $2.6 billion, or 61 cents a share, up 22% from a year earlier, the company said Tuesday. The earnings not only topped the consensus forecast of 50 cents a share, they were better than the most bullish estimate of any analyst surveyed by earning tracker Thomson Reuters.
The last time Ford earned this much in the first quarter was in 1998, when the company sold part of its financial services unit. The past quarter’s performance underlined the continued turnaround at the company, which has now posted seven straight quarters of profit after years of losses.
Shares of Ford climbed more than 4% in premarket trading to $16.21. Shares have struggled since Ford missed earnings forecasts with its fourth-quarter results, then was hit by investor worries about the impact of higher gas prices.
Revenue rose 18% to $33.1 billion, which also easily topped the most optimistic forecasts, as the number of vehicles Ford sold worldwide climbed 12%. In March, Ford’s U.S. sales topped those of rival General Motors for the first time since 1998.
“Our team delivered a great quarter, with solid growth and improvements in all regions,” said CEO Alan Mulally in the company’s earnings statement.
While the number of vehicles sold was not a surprise, the revenue per car was stronger than analysts had expected, helping the company to exceed expectations. Improved pricing allowed it to post increased profits in all of its various regions worldwide.
Ford did not give a specific earnings target for the rest of the year, although it said it expects to continue to post improved results. But it warned that lower profit from its Ford Credit unit, higher commodity prices, seasonal factors and the need for increased investments and costs related to its longer-term plans will make it difficult to match the first quarter’s strong results later this year.
Still, Ford said it expects to continue to gain market share in both the U.S. and European markets.